Bush welcomes GOP tax-cut plan

WilliamL. Watts

WASHINGTON (CBS.MW) - Calling it a "great day" for taxpayers, President Bush praised a compromise tax-cut proposal struck Tuesday by House and Senate GOP leaders that would trim $250 billion from his plan for $1.6 trillion in tax relief over 10 years.

The White House and GOP leaders hope the compromise measure will gain enough support from centrist Democrats and Republicans to pass the evenly divided Senate.

The agreement, which came out of ongoing negotiations to iron out differences between House and Senate budget blueprints, would provide $1.25 trillion in cuts between 2002 and 2011. An additional $100 billion would be made available to taxpayers this year and next in a bid to jump-start the economy.

The tax cut would be one of the largest in U.S. history.

"I congratulate the members of the Senate and the House, Republicans and Democrats, who have worked so hard to achieve this bipartisan agreement," Bush said in a brief White House Rose Garden appearance.

Negotiations were necessary to iron out differences between House and Senate budget resolutions. The version passed by the GOP-controlled House had stuck to Bush's script, setting aside $1.6 trillion for tax cuts.

In the evenly divided Senate, GOP leaders couldn't overcome defections by two moderate Republicans, forcing them to accept $1.2 trillion in cuts. The Senate version also would have set aside $85 billion of the projected 2001 budget surplus for immediate tax relief.

GOP aides said House and Senate negotiators still haven't resolved differences on spending, however. The House resolution would hold discretionary spending to a 4 percent increase in fiscal 2002, while the Senate version would provide a boost of more than 8 percent.

House Majority Leader Dick Armey was "encouraged" by the agreement, but wants to see the "tax component in the context of overall spending" before offering final judgment, an Armey spokesman said.

Senate Majority Leader Trent Lott said he hoped that negotiators would be able to come up with a final agreement by Tuesday afternoon.

President Bush had sought a $1.6 trillion cut over 10 years. Democratic leaders have argued that there isn't room for a cut larger than $900 billion, including interest costs, without jeopardizing Social Security and Medicare surpluses.

Senate Minority Leader Tom Daschle said the GOP proposal was a "step in the right direction" but said he was still worried that a $1.25 trillion cut would threaten the government's ability to fund education and health care investments, including a Medicare prescription drug benefit, and debt reduction.

Daschle said he wouldn't be able to support the measure and that he doubted it would attract many Democrats.

The package, however, appears to conform closely to calls by a group of Senate centrists, led in de facto fashion by Louisiana Democrat John Breaux, that has emerged as a key swing bloc in the upper chamber. The informal group of 14 Democrats and 2 Republicans has maintained that a tax cut of more than $1.25 trillion isn't affordable.

Budget resolutions aren't binding. House and Senate lawmakers must still come up with tax package details. That will likely entail scaling back or holding off on measures already passed by the House.

The House, attempting to build momentum for the Bush plan, passed a series of tax bills in short order that encompassed the major elements of the Bush tax plan. The measures would provide around $1.6 trillion worth of cuts, including $958 billion in across-the-board income tax rate reductions, elimination of the so-called marriage penalty, doubling of the child credit and a gradual repeal of the estate tax.

The Senate has yet to take up any tax legislation. Lott said that if the $1.25 trillion figure holds, the Bush plan would need obviously to be trimmed.

"Over the 10-year period, I don't believe that's enough funding to do all that the president has asked for in his core packages, between rate cuts, the doubling of the child tax credit, the marriage penalty relief, and the elimination of the death tax," he said.

Lott said no decisions had been made on whether to trim each part of the Bush package or pull some of the components out in order to bring the overall size down to $1.25 trillion.

Senate Finance Committee Chairman Charles Grassley said Monday that virtually all components of the tax plan would be open to adjustment once a compromise figure is established.

"You have to think of every provision being negotiable. That means marriage penalty, child credit, estate tax, whatever we do on AMT (alternative minimum tax), which isn't in the President's proposal, and what we do on (income tax) rates," Grassley said.

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